Biotech company 10x Genomics (NASDAQ: TXG) beat Wall Street’s revenue expectations in Q2 CY2025, with sales up 12.9% year on year to $172.9 million. On the other hand, next quarter’s revenue guidance of $142 million was less impressive, coming in 1.5% below analysts’ estimates. Its GAAP profit of $0.28 per share was significantly above analysts’ consensus estimates.
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10x Genomics (TXG) Q2 CY2025 Highlights:
- Revenue: $172.9 million vs analyst estimates of $139.5 million (12.9% year-on-year growth, 24% beat)
- EPS (GAAP): $0.28 vs analyst estimates of -$0.37 (significant beat)
- Revenue Guidance for Q3 CY2025 is $142 million at the midpoint, below analyst estimates of $144.2 million
- Operating Margin: 17.4%, up from -27.3% in the same quarter last year
- Market Capitalization: $1.58 billion
Company Overview
Founded in 2012 by scientists seeking to overcome limitations in traditional biological research methods, 10x Genomics (NASDAQ: TXG) develops instruments, consumables, and software that enable researchers to analyze biological systems at single-cell resolution and spatial context.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, 10x Genomics grew its sales at an impressive 20.7% compounded annual growth rate. Its growth beat the average healthcare company and shows its offerings resonate with customers.
Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. 10x Genomics’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 6.5% over the last two years was well below its five-year trend. 
We can dig further into the company’s revenue dynamics by analyzing its most important segment, Consumables. Over the last two years, 10x Genomics’s Consumables revenue (recurring orders) averaged 3.7% year-on-year growth. This segment has lagged the company’s overall sales. 
This quarter, 10x Genomics reported year-on-year revenue growth of 12.9%, and its $172.9 million of revenue exceeded Wall Street’s estimates by 24%. Company management is currently guiding for a 6.4% year-on-year decline in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to decline by 7.6% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and indicates its products and services will see some demand headwinds.
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Operating Margin
Although 10x Genomics was profitable this quarter from an operational perspective, it’s generally struggled over a longer time period. Its expensive cost structure has contributed to an average operating margin of negative 42.4% over the last five years. Unprofitable healthcare companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.
On the plus side, 10x Genomics’s operating margin rose over the last five years, as its sales growth gave it operating leverage. Zooming in on its more recent performance, we can see the company’s trajectory is intact as its margin has also increased by 15.8 percentage points on a two-year basis.
This quarter, 10x Genomics generated an operating margin profit margin of 17.4%, up 44.7 percentage points year on year. This increase was a welcome development and shows it was more efficient.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Although 10x Genomics’s full-year earnings are still negative, it reduced its losses and improved its EPS by 7.4% annually over the last five years. The next few quarters will be critical for assessing its long-term profitability.
In Q2, 10x Genomics reported EPS at $0.28, up from negative $0.32 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects 10x Genomics to perform poorly. Analysts forecast its full-year EPS of negative $0.70 will tumble to negative $1.01.
Key Takeaways from 10x Genomics’s Q2 Results
We were impressed by how significantly 10x Genomics blew past analysts’ EPS expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. On the other hand, its revenue guidance for next quarter missed. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 7.9% to $13.79 immediately following the results.
10x Genomics may have had a good quarter, but does that mean you should invest right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
